Profit (收益) = Everything the company gets to keep from the Revenue after it pays its costs!

Present Profit v. Future Profit

Present Profit = What we are keeping right now. (Most Important)

Expected Future Profit = What we think we’ll get in the future (Companies with higher expected future profits have more value. While companies with a possibility of low future profits will have a lower value)

Profit is Counted in Two Ways

Example: Joshua has a company (Company A) that just made $150,000 in Revenue. The company spends $9,000 on Taxes and Utilities, $3,000 on Wages, and $5,000 on Raw Materials. Joshua gave the company the building but would have made $2,000 if he used it as a school instead. He also lost $5,000 on his original investment.

Economic Profit (经济利润) = Revenue – Total Economic Cost

What is Company A’s Economic Profit?

Accounting Profit (会计利润) = Revenue – Explicit Costs.

What is Company A’s Accounting Profit?

In Managerial Economics, we usually mean Accounting Profit when we say “Profit”

Don’t forget, the Chinese translations come from the Chinese students rather than professional translators. While I believe they are accurate, you may want to consult professionals before using them for official documents. This is mainly intended to contribute to daily conversation between English speaking Companies and Chinese companies.

Abbreviations:v. = Verbn. = Nounadj. = Adjectiveadv. = Adverb

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